Insurance – Double Coverage

The REC (or mortgage or deed of trust) between the seller and the purchaser requires the
purchaser to maintain hazard insurance for the benefit of the seller. The purchaser can
satisfy this requirement by obtaining a homeowner’s policy, and naming the seller in the
policy as a “loss payee”. He could also be required by the financing instrument to name
the holder of the first mortgage as a loss payee under his policy, and increase the insurance
amount to a figure large enough to cover the mortgagee’s interest